UK is still some way from recession

IT IS well-known that if all the economists in the world were laid end to end they would still all point in different directions. Thus a leak from the International Monetary Fund's assessment of world growth prospects is upbeat about Britain just at the point when Chancellor Gordon Brown issues a warning about the dangers to this country caused by the US economic slowdown.

Both are probably right, it is simply whether the glass is viewed as half full or half empty. The still-unpublished International Monetary Fund report allegedly says that British growth will be 2.6% this year, down from the 3% of 2000 but right in the middle of the range given in the March Budget. And it sees a pick-up next year to 2.8%.

The Chancellor, in contrast, chose to stress in a speech today 'the need to remain vigilant . . . at a time of more-challenging global economic conditions', in a way that echoed a little-noticed section of his Budget speech which also warned that a prolonged US slowdown was bound to have some impact here.

But, equally, both could possibly be wrong. Economic forecasters are at their worst at the turning points when conditions change. Time after time in the past 50 years they have not only failed to predict the onset of recession but even less excusably have failed to recognise recession even when it had begun.

If a severe downturn is coming, we would be well advised not to expect early warnings from the dismal scientists. The corollary is that at times like these we should not treat any of their forecasts, even the ones we would like to be true, with much respect.

The key is, indeed, America, not just because of trade links but because financial market instability knows no frontiers and a loss of confidence in the capital markets affects all who try to do business.

The lay-offs in the securities industry on Wall Street, at Merrill Lynch yesterday and Morgan Stanley today, and British car production figures showing a 30% decline on a year ago are pretty depressing. But neither of these

adds up to recession. The Chancellor's and the Government's confidence in our prospects still appears justified.

Still Kalm at DixonsDIXONS, normally so adroit at public relations, seems to have been wrong-footed by weekend reports that chairman Sir Stanley Kalms is soon to step down.

The company's immediate response was to dismiss the story as pure speculation. Only late yesterday was it confirmed as fact, not rumour, with the rider that Sir Stanley is to become Life President of the company he has made one of the most consistently successful High Street retailers in Britain.

These days leaks seldom happen by accident. Often they are used by directors, advisers and other interested parties as a weapon to help them achieve a policy goal. At its crudest, those advocating a particular course of action that has failed to command total support from their colleagues leak to the Press that the decision has been taken. They hope that reluctance to engage in a public slanging match about what appears to be a fait accompli will bounce those opposed to the policy into acquiescence.

It would be fascinating to know if Sir Stanley had actually agreed to hand over the chair at the point last week when the leak occurred, or if perhaps he was still hoping to maintain some continuing close involvement with the company.

It is an open secret in the City that the Dixons board has its share of personality clashes. Perhaps the long hesitation yesterday meant that, like the swan, it was a case of 'Kalms on top, but spinning furiously underneath'.